국제금융에서 중국의 위상변화와 시사점 (China in International Finance : Present and Future)

It is theoretically proper to sequence policies in the order of domestic financial reform including interest rate liberalization, greater flexibility of exchange rate, capital account liberalization, and currency internationalization. Currently China's policies, however, are under way in a mixed order. After the global financial crisis renminbi internationalization policy started to be driven with priority. Although renminbi internationalization is the ultimate goal of China, it would face difficulties in making further progress without prior measures for financial openness, which in turn calls for exchange rate flexibility.This logic leads to the prediction that China will increase its exchange rate flexibility sooner or later. Such a decision possibly would be prompted by the recognition that the flexibility is a crucial precondition for the ultimate goal, namely internationalized renminbi. Greater flexibility of exchange rate would be also beneficial to China because it needs to deal with both appreciation pressure from outside and inflation pressure from inside. Moreover, China is likely to make progress in capital account liberalization, albeit slow and limited. In particular, it may loosen regulations on portfolio investment including larger investment ceilings, while maintaining strict restrictions on short-term capital flows and financial derivatives. However, it would take long time to achieve full-fledged convertibility of renminbi because China has a long way to go to fulfill its preconditions such as domestic financial reform. In conclusion China is very likely to push forward internal financial reform, greater exchange rate flexibility, capital account liberalization, and currency internationalization in a gradual manner simultaneously rather than in a relevant order